REG - Fonix Mobile PLC - Interim Results
12/03/2024 07:00
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RNS Number : 4162G Fonix Mobile PLC 12 March 2024
12 March 2024
Fonix Mobile plc
("Fonix" or the "Company")
Interim Results for the six months ended 31 December 2023
Strong trading momentum continues with further international growth
opportunities
Fonix, the UK focused mobile payments and messaging company, is pleased to
announce its unaudited interim results for the six months to 31 December 2023
(the "Period").
Financial Highlights
H1 FY24 H1 FY23 Change
Gross profit £9.2m £7.8m +17.9%
Adjusted EBITDA(1) £7.3m £6.2m +17.7%
Interim DPS 2.60p 2.36p +10.2%
Adjusted PBT(2) £7.4m £5.9m +25.4%
Adjusted EPS(3) 5.7p 4.9p +16.3%
Underlying cash at period end(4) £11.2m £8.4m +33.3%
Net underlying free cash flows from operating activities(4) £6.6m £5.5m +20.0%
Operational Highlights
· Record levels of commercial trade were achieved in December.
· New Subscription Manager product has now been released in
preparation for major charity events in 2024.
· Fonix continues to maintain high client retention, with over 99% of
income of a repeating nature.
· 100% platform uptime throughout the Period whilst supporting record
levels of transactions and consumer engagement.
· Fonix's key service lines have each grown in the Period and the
business retains a significant pipeline of enterprise prospects going into H2
FY24.
· Increased interim dividend of 2.6p (FY23: 2.36p) per share, in line
with the company's progressive dividend policy to pay out at least 75% of
adjusted EPS.
· Underlying free cash at £11.2m (H1 FY23: £8.4m) at the Period
end, with the Board considering options for use of surplus cash, which may be
returned to shareholders in the form of a special dividend or further share
buy-backs.
Outlook
The second half of the year has started strongly with performance in line with
recently upgraded expectations. As was the case in previous years, we are
expecting gross profit to be slightly weighted towards the first half of this
financial year, due to some seasonality in the trade of our significant media
customers.
In line with our growth plans, we will continue to invest more in future
growth, with further investment into product as well as investments in organic
international growth, as we look to continue to deliver sustainable, highly
profitable growth for our shareholders.
The Company has a strong pipeline of commercial opportunities, including
significant enterprise deals in the UK and overseas, which provides the Board
with confidence in the ongoing success of the business. We look forward to
updating shareholders at the appropriate time as we progress through the
current financial year.
Notes
(1) Adjusted EBITDA excludes share-based payment charges along with
depreciation, amortisation, interest and tax from the measure of profit.
(2) Adjusted PBT is profit before tax excluding share-based payment charges.
(3) Adjusted EPS is earnings per share excluding share-based payment charges.
(4) Underlying cash is actual cash excluding cash held on behalf of customers.
Rob Weisz, CEO, commented:
"We've made excellent progress on our strategic priorities in the period, once
again nurturing significant growth from both established clients and newly
onboarded customers alike.
As we have begun to explore overseas markets we have identified territories
with favourable market dynamics and exciting growth potential. At the same
time we have continued to add significant additional depth to our product
offering, expanding our competitive advantage and creating the founding
dimensions for growth into the future."
Enquiries
Fonix Mobile plc
Tel: +44 20 8114 7000
Robert Weisz, CEO
Michael Foulkes, CFO
Cavendish Capital Markets Limited (Nomad and Broker)
Tel: +44 20 7220 0500
Jonny Franklin-Adams / Seamus Fricker (Corporate Finance)
Sunila de Silva (ECM)
About Fonix
Founded in 2006, Fonix provides mobile payments and messaging services for
clients across media, telecoms, entertainment, enterprise and commerce.
When consumers make payments, they are charged to their mobile phone bill.
This service can be used for ticketing, content, cash deposits and donations.
Fonix's service works by charging digital payments to the mobile phone bill,
either via carrier billing or SMS billing. Fonix also offers messaging
solutions.
Based in London, Fonix is a fast growth business driven by blue chip clients
such as ITV, Bauer Media, RTÉ, Global Media, Comic Relief and Children in
Need to name a few.
CEO's review
Fonix has continued to make strong progress on its strategic and financial
goals in the first six months of the financial year, achieving double-digit
period-on-period growth in gross margins and profitability. Gross profit
growth has been particularly strong outside the UK where customers onboarded
in the previous financial year have continued to see substantial growth this
financial year.
Fonix's two core business lines of mobile payments and mobile messaging have
each grown strongly in the period, increasing by 14% and 53% year-on-year
respectively. Mobile payments remains the business's primary commercial focus
and represented 82% (H1 FY23: 84%) of gross profits. Mobile messaging
continued to grow strongly due to higher demand from existing customers, who
increased their adoption of Campaign Manager's marketing capabilities, as well
as strong demand from new clients.
Total Payment Value (TPV) represents the gross value of consumer spend on both
commercial and charity customer services. TPV growth from Fonix's commercial
clients remained strong in the period and was largely proportional to the
increase in gross profits. Charity TPV grew marginally year-on-year as we
started to see a slight recovery in the level of consumer giving this
financial year.
Market opportunity
The market for Fonix's services in our core markets continues to be
significant and growing, with Fonix considered to be the leading provider of
interactive services in both the UK & Ireland.
By maintaining our strategy of focusing on sectors where we see sustainable
growth potential, we see many opportunities to expand our services into new
geographical markets and broaden our business offering through the value chain
of our existing customers. Through our collaborative customer relationships,
our Campaign Manager product is gradually evolving to become agnostic to
particular payment methods and messaging channels. This shift means that we
increasingly view alternatives to mobile payments and SMS, such as debit card
payments or WhatsApp messaging as opportunities for further growth and
differentiation. Once again, working in partnership with our key customers, we
are already on a journey of engineering these technologies into our core
products.
Growth strategy
Fonix continues to take a balanced approach to sustainable growth, looking to
achieve a material percentage growth in gross profits, whilst ensuring we
allocate ample resources to enhancing our products and geographical presence.
Guided by this strategy, the company has bolstered its planned investment in
product development and dedicated resources to facilitate international
expansion.
The business has made good progress with each of its growth strategy pillars,
which continue to guide our decision making and how we invest:
1. Grow & deepen existing relationships
Gross profits from key commercial customers have continued to grow solidly in
the period, demonstrating the continued resilience of Fonix's business model
in a challenging economic environment. We continue to forge deeper
relationships with our biggest clients and find new commercial opportunities
for growth from these accounts. At the same time, the majority of our larger
customers now refer to Fonix as a 'partner' (rather than a supplier)
signifying the collaborative nature of our relationship and emphasising the
mutual trust, shared goals, and commitment to long-term success. These
alliances remain one of Fonix's most understated competitive advantages. The
company continues to have over 120 active customers.
In the Republic of Ireland we have further elevated our position in the market
by helping coordinate the industry response to the proposed new gambling
regulation bill, which has the potential to span into the governance of
interactive services in the region. Whilst the new legislation may pose a risk
to the operation of prize draw competition services in Ireland (as described
in more detail on page 25 of the company's Annual report and Accounts 2023),
our past experience of liaising with regulators in the UK has proved
invaluable in helping us guide customers and operators on the best way to
respond and engage with regulators.
2. Take a disciplined sector focus
We continue to take a sector focused approach to growth, leveraging our
significant reference clients and partnerships, as well as building
sophisticated industry specific features into our products.
The media sector remains the cornerstone of our business, comprising 80% of
gross profits during the period. As well as advancing customer prospects in
the UK and Ireland, media broadcasters also represent our primary commercial
focus when exploring new international markets. Leveraging over a decade of
significant product investment in this domain, Fonix maintains a substantial
competitive edge, positioning us favourably for expansion into new overseas
territories.
This financial year has seen the beginning of a recovery in consumer donations
to charity, suggesting the downward pressure from the cost of living crisis
may be tapering off. The market for charity donations continues to be
significant, and with carrier billing payments offering a 'near-free'
commission model, coupled with Fonix's outstanding reference clients, there
remains many more opportunities for expansion in this market.
Beyond media and charity, we continue to target a number of new opportunities
in online services, particularly in gaming and e-mobility sectors, where we
can clearly demonstrate the reduction in basket abandonment achieved by
incorporating carrier billing as an alternative payment option in a consumer's
checkout flow.
3. Create sustainable, long-term profitability for
shareholders
Fonix continues to achieve material growth in gross profits and adjusted
EBITDA, with both growing 17.9% and 17.7% respectively year-on-year in the
period. With our core commercial focus remaining on large, multinational
clients with relatively long sales cycles, and our priority on nurturing new
clients to ensure that they are transacting to their full potential, we
continue to take a considered approach to growth by balancing new business
wins and international expansion efforts with driving transactions with
existing clients. We believe this remains the best approach for providing a
long-term return to shareholders.
4. Be client and partner led with international expansion
We continue to leverage our network of multinational clients and operator
partnerships to establish direct connectivity in further overseas markets with
the aim of launching services with a number of media clients in new
international territories over the next few years. We are confident this is
the best strategy for achieving sustainable, highly valued growth, where our
domain expertise can be expanded into new markets.
As we explore international market opportunities, we have now identified
several other European countries with well regulated markets, conducive to
operating interactive services. These markets are typically characterised as
having a few small incumbent providers with modest technological capabilities,
often operating as minor divisions within larger organisations where
interactive services are not a core strategic focus. These markets represent
medium to long-term growth prospects for the business, instilling confidence
in the board regarding the business' ability to sustain its international
expansion strategy for years to come.
5. Widen our technological and operational advantage
We have continued to make a substantial investment in our world leading
interactive services product, Campaign Manager, making significant user
interface improvements, alongside adding support for subscriptions,
Interactive Voice Response (IVR) voting and enhanced promotional offers to
consumers. Having onboarded several new enterprise scale clients in 2023, the
platform has sustained 100% uptime during the period, processing record levels
of consumer transactions and interactions without interruption. Once more, the
robustness and reliability of our technology in supporting high profile live
events remains one of our key competitive advantages.
The business has continued to build on its exemplary reputation for compliance
in the industry, extending our strong relationships with mobile operators and
regulators in the UK to counterparts in Ireland. We strongly believe this
trusted relationship with our partners continues to provide a pivotal role
when winning new business and increases the barriers to entry to new providers
looking to enter the market.
People
The company takes immense pride in its reputation as a market leader,
fostering a culture where our team members can truly thrive. Attracting and
retaining the best industry leading talent continues to be a top priority for
the business in maintaining this status. Our headcount grew by 10%
year-on-year to an average of 45 in the period (H1 FY23: 41) and we continue
to maintain a diverse workforce, with 45% of our staff identifying as female.
Like many businesses, we found it necessary to provide our staff with pay
raises above the historic average in the latest pay review, acknowledging the
continued challenges posed to people by the rising cost of living. However,
I'm pleased to report that we successfully incorporated these increases into
our existing growth projections and managed to offset any additional costs by
implementing savings measures elsewhere. We continue to be mindful of
inflation moving forward, and continue to be confident of managing additional
costs within our existing plans.
Product
Driven by demand from our customers, during the period we launched the first
iteration of our subscription manager add-on to Campaign Manager, which will
allow our largest charity clients to maintain ongoing transactions with their
supporters throughout the year and beyond their annual telethon events. At the
same time we have rebuilt the interface of Campaign Manager, providing a more
intuitive and faster experience to our users.
Financial Review
Key performance indicators
Financial H1 FY24 H1 FY23 Change
Gross profit £9.2m £7.8m 17.9%
Adjusted EBITDA(1) £7.3m £6.2m 17.7%
Adjusted PBT(2) £7.4m £5.9m 25.4%
Underlying cash(3) £11.2m £8.4m 33.3%
Adjusted EPS(4) 5.7p 4.9p 16.3%
Non-financial H1 FY24 H1 FY23 Change
Total payments value (TPV) £158m £137m 15.3%
( )
( )
(1) Adjusted EBITDA excludes share-based payment charges along with
depreciation, amortisation, interest and tax from the measure of profit.
(2) Adjusted PBT is profit before tax excluding share-based payment charges.
(3) Underlying cash is actual cash excluding cash held on behalf of customers.
(4) Adjusted EPS is earnings per share excluding share-based payment charges.
Revenue
Company revenues for the period were £39.7m (H1 FY23: £32.8m) growing 21% on
the previous year, driven by strong growth across mobile payments and mobile
messaging service lines. Revenues recognised for mobile payments relate to the
total commission charged to customers, including the Mobile Network Operator
(MNO) share of a transaction, with the MNO commission also recognised within
cost of sales. The Directors therefore monitor results and performance of the
Company based upon the gross profit generated, which is considered the more
meaningful measure of performance.
Revenue and gross profit grew more strongly than TPV, as charity related TPV,
which is a relatively low margin product, only grew marginally by 2%
year-on-year and was overshadowed by growth in more profitable commercial
payments products.
Gross Profit
Gross profit is the business' most important financial indicator as this
represents the company's share of revenue for processing mobile payments and
SMS messages.
Gross profit for the period increased to £9.2m (H1 FY23: £7.8m) growing
17.9% on the previous period, with mobile payments growing 14%, mobile
messaging growing 53% and managed services growing 2%. The shallow growth in
managed service fees, which makes up a relatively small amount of gross profit
was attributable to only a marginal increase in the number and size of charity
campaigns in the period.
Blended gross profit margins decreased slightly to 23.2% (H1 FY23: 23.8%)
attributable to changes in the product and client mix affecting mobile
payments and mobile messaging gross margin percentages.
Adjusted Operating Expenses
Operating costs have remained firmly under control despite significant
inflationary pressure in the wider economy, with costs generally only
increasing where the business has invested more in product and internationally
focused resources. Adjusted operating costs increased 16.6% in the period to
£1.90m (H1 FY23: £1.63m). The majority of the increase related to additional
staff costs.
Staff related costs and incentives increased to £2.0m (H1 FY23: £1.6m) in
the period reflecting the additional investment in product and exploring
international markets. Average headcount for the period was 45 (H1 FY23: 41).
Software development costs of £509k (H1 FY23: £344k) were capitalised in the
period, representing 65% (H1 FY23: 56%) of development costs. The increase in
capitalised expenditure reflects the additional focus on new product
innovations and significant efforts onboarding new customers (at the expense
of product development) in the previous year. The capitalisation of current
period development spend was offset by an amortisation charge of £325k (H1
FY23: £267k). Development costs are amortised on a straight-line basis over
3-years.
Adjusted EBITDA
The growth in gross profit and the continued control of costs has resulted in
an equivalent increase in adjusted EBITDA, which is up 17.7% at £7.3m (H1
FY23: £6.2m) for the period. To provide a better guide to the underlying
business performance, adjusted EBITDA excludes share-based payment charges
along with depreciation, amortisation, interest and tax from the measure of
profit.
Finance income and expenses
Finance expenses which relate to the unwinding of the discounted lease
liability were £4k (H1 FY23: £3k) as the business renewed its office lease
in November 2023 for a further three years.
Interest income on bank deposits increased due to the increase in bank
interest rates during 2023.
Corporation tax
Following the increase in the headline rate of UK corporation tax to 25% part
way through the prior financial year, combined with some significant changes
to the R&D tax credit scheme, we are anticipating our effective rate of
corporation tax to increase to over 23% this financial year (FY24). Our
effective rate of corporation tax is also expected to marginally increase
again in FY25 due to proposed changes to the SME R&D scheme from April
2024 onwards.
Statement of Financial Position
The company had net assets of £10.3m at the period end (H1 FY23: £8.2m),
including capitalised software development costs with a carrying value of
£1,423k (H1 FY23: £1,072k). The movement in net assets reflects profits
after tax less dividend payments and share buy-backs.
The company pays out monies to customers (merchants) once reconciliations have
been completed and the equivalent monies have been received from mobile
network operators. As a result, the company often holds significant amounts of
customer related receivables, payables and cash, which can vary substantially
from period to period, depending on timing of customer campaigns and mobile
operator outpayments.
Current assets increased to £74m (H1 HY23: £67m) at the period end, largely
in line with the increase in trade. Trade and Other Receivables, which
includes monies receivable on behalf of customers, decreased in the period and
was offset by an increase in actual cash. This was purely due to the timing of
some mobile network operator outpayments at the period end, which were paid a
few days earlier than the previous period. Current liabilities increased to
£65m (H1 FY23: £60m), again largely attributable to an increase in trading.
Non-current liabilities increased to £0.4m (H1 FY23: £0.1m) as the company
signed a new three year lease for its office premise in November 2023.
Cash and underlying cash
The board distinguishes between actual cash, which includes cash held on
behalf of customers, and underlying cash, which excludes cash held on behalf
of customers.
Underlying cash far better represents the free cash flow available to the
business. Underlying cash increased 33% to £11.2m (H1 FY23: £8.4m) due to
additional retained earnings.
Actual cash, which includes cash held on behalf of customers, varies
substantially from period to period and is particularly sensitive to the
timing of mobile network operator payments at month end, as well as
pass-through outpayments for customer charity campaigns. Actual cash held at
the period end was £29.5m (H1 FY23: £20.4m) in the period. The increase is
down to higher retained earnings along with mobile network operator payments
being paid a few days earlier at the period end (than the previous year).
Dividends declaration
We are pleased to declare our increased interim dividend of 2.6p per share, in
line with the company's progressive dividend policy to pay out at least 75% of
adjusted EPS to shareholders in the form of an ordinary dividend each period.
The interim dividend will be paid on 29 March 2024 to shareholders on the
register on 22 March 2024, with an ex-dividend date of 21 March 2024.
Outlook
The second half of the year has started strongly with performance in line with
recently upgraded expectations. As was the case in previous years, we are
expecting gross profit to be slightly weighted towards the first half of this
financial year, due to some seasonality in the trade of our significant media
customers.
In line with our growth plans, we will continue to invest more in future
growth, with further investment into product as well as investments in organic
international growth, as we look to continue to deliver sustainable, highly
profitable growth for our shareholders.
The Company has a strong pipeline of commercial opportunities, including
significant enterprise deals in the UK and overseas, which provides the Board
with confidence in the ongoing success of the business. We look forward to
updating shareholders at the appropriate time as we progress through the
current financial year.
Robert Weisz
Chief Executive Officer
Unaudited interim results for the 6 months ended 31 December 2023
Statement of Comprehensive Income
For the 6 months ended 31 December 2023
Unaudited Unaudited Audited
6 months to 6 months to Year to
31 December 31 December 30 June
2023 2022 2023
Note £'000 £'000 £'000
Continuing operations
Revenue 4 39,658 32,815 64,916
Cost of sales (30,460) (25,009) (49,841)
Gross profit 3 9,198 7,806 15,075
Other income - - -
Adjusted operating expenses(1) (1,895) (1,626) (3,508)
Profit before interest, tax, depreciation, amortisation, share-based payment 7,303 6,180 11,567
charge and exceptional costs
Share-based payment charge (46) (64) (125)
Depreciation and amortisation (389) (333) (924)
Operating profit 6,868 5,783 10,518
Finance income 496 55 341
Finance expense (4) (3) (5)
Profit before taxation 7,360 5,835 10,854
Taxation (1,675) (990) (2,057)
Total comprehensive profit for the period 5,685 4,845 8,797
(1) Adjusted operating expenses excludes share-based payment charge,
depreciation and amortisation
Earnings per share Unaudited Unaudited Audited
6 months to 6 months to Year to
31 December 31 December 30 June
2023 2022 2023
Basic earnings per share 5.7p 4.8p 8.8p
Diluted earnings per share 5.7p 4.8p 8.7p
Adjusted basic earnings per share 5.7p 4.9p 8.9p
Statement of Financial Position
As at 31 December 2023
Unaudited Unaudited Audited
31 December 31 December 2022 30 June
2023 2023
£'000 £'000 £'000
Non-current assets
Intangible asset 1,423 1,072 1,239
Right of use asset 346 99 42
Tangible assets 27 22 28
1,796 1,193 1,309
Current assets
Trade and other receivables 44,032 46,658 36,058
Cash and cash equivalent 29,548 20,438 20,648
73,580 67,096 56,706
Total assets 75,376 68,289 58,015
Equity and liabilities
Equity
Share capital 100 100 100
Share premium account 679 679 679
Treasury shares (242) - (495)
Share option reserves 309 236 297
Retained earnings 9,503 7,215 8,807
10,349 8,230 9,388
Liabilities
Non-current liabilities
Deferred tax liabilities 145 148 157
Lease liabilities 206 - -
351 148 157
Current liabilities
Trade and other payables 64,566 59,835 48,453
Lease liabilities 110 76 17
64,676 59,911 48,470
Total liabilities 65,027 60,059 48,627
Total equity and liabilities 75,376 68,289 58,015
Statement of Changes in Equity
For the 6 months ended 31 December 2023
Share capital Share premium Share option reserve Treasury shares Retained earnings Total
£'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 July 2022 100 679 172 - 6,870 7,821
Profit for the period - - - - 4,845 4,845
- - - - 4,845 4,845
Transactions with shareholders
Dividends - - - - (4,500) (4,500)
Share-based payment charge - - 64 - - 64
- - 64 - (4,500) (4,436)
Balance at 31 December 2022 100 679 236 7,215 8,230
Profit for the period - - - - 3,952 3,952
- - - - 3,952 3,952
Transactions with shareholders
Dividends - - - - (2,360) (2,360)
Share-based payment charge - - 61 - - 61
Purchase of own shares - - - (495) - (495)
- - 61 (495) (2,360) (2,794)
Balance at 30 June 2023 100 679 297 (495) 8,807 9,388
Profit for the period - - - - 5,685 5,685
- - - - 5,685 5,685
Transactions with shareholders
Dividends - - - - (4,884) (4,884)
Share-based payment charge - - 46 - - 46
Exercise of share options issued from treasury shares - - - 253 (139) 114
Fair value of options exercised in the period - - (34) - 34 -
- - 12 253 (4,989) (4,724)
Balance at 31 December 2023 100 679 309 (242) 9,503 10,349
Statement of Cash Flows
For the 6 months ended 31 December 2023
Unaudited Unaudited Audited
6 months to 6 months to Year to
31 December 31 December 30 June
2023 2022 2023
£'000 £'000 £'000
Cash flows from operating activities
Profit before taxation 7,360 5,835 10,854
Adjustments for
Depreciation 7 10 16
Amortisation 382 323 908
Share-based payment charge 46 64 125
Finance income (496) (55) (341)
Finance expense 4 3 5
(Increase)/decrease in trade and other receivables (7,975) (14,683) (4,083)
Increase/(decrease) in trade and other payables 15,120 17,355 6,115
Income tax paid (693) (550) (1,750)
Net cash flows from operating activities 13,755 8,302 11,849
Cash flows from investing activities
Interest received 496 55 341
Payments to acquire tangible assets (6) (7) (19)
Payments to acquire intangible assets (510) (344) (1,040)
Net cash flows from investing activities (20) (296) (718)
Cash flows from financing activities
Net proceeds from issue of equity 114 - -
Dividends paid (4,884) (4,500) (6,860)
Purchase of own shares - - (495)
Capital payments in respect of leases (61) (57) (116)
Interest paid in respect of leases (4) (3) (4)
Net cash flows from financing activities (4,835) (4,560) (7,475)
Net increase in cash and cash equivalents for the period 8,900 3,446 3,656
Cash and cash equivalents at beginning of period 20,648 16,992 16,992
Cash and cash equivalents at end of period 29,548 20,438 20,648
Statement of Underlying Free Cash Flows
For the 6 months ended 31 December 2023
The Company's mobile payments segment involves collecting cash on behalf of
clients which is then paid to clients net of the Company's share of revenues
or fees associated with collecting the cash. The Company's cash balance
therefore fluctuates depending on the timing of "pass through" cash received
and paid.
The analysis below shows the movements in the Company's free underlying cash
flow excluding the monies held on behalf of customers. The underlying cash is
derived from actual cash by adjusting for customer related trade and other
receivables less customer related trade and other payables and customer
related VAT liabilities.
Unaudited Unaudited Audited
6 months to 6 months to Year to
31 December 31 December 30 June
2023 2022 2023
£'000 £'000 £'000
Underlying free cash flows from operating activities
Profit before taxation 7,360 5,835 10,854
Adjustments for
Depreciation 7 10 16
Amortisation 382 323 908
Share-based payment charge 46 64 125
Finance income (496) (55) (341)
Finance expense 4 3 5
(Increase)/decrease in trade and other receivables (50) (19) 11
Increase/(decrease) in trade and other payables 69 (116) 24
Income tax paid (693) (550) (1,750)
Net underlying free cash flows from operating activities 6,629 5,495 9,852
Underlying free cash flows from investing activities
Interest received 496 55 341
Payments to acquire tangible assets (6) (7) (19)
Payments to acquire intangible assets (510) (344) (1,039)
Net underlying free cash flows from investing activities (20) (296) (717)
Underlying free cash flows from financing activities
Net proceeds from issue of equity 114 - -
Dividends paid (4,884) (4,500) (6,860)
Purchase of own shares - - (495)
Capital payments in respect of leases (61) (57) (116)
Interest paid in respect of leases (4) (3) (4)
Net underlying free cash flows from financing activities (4,835) (4,560) (7,475)
Net increase in underlying free cash for the period 1,774 639 1,660
Underlying free cash at beginning of period 9,446 7,786 7,786
Underlying free cash equivalents at end of period 11,220 8,425 9,446
Notes to the preliminary financial information
1. Basis of preparation
The financial information relating to the half year ended 31 December 2023 is
unaudited and does not constitute statutory financial statements as defined in
section 434 of the Companies Act 2006.
The Company is a public limited company incorporated and domiciled in England
& Wales and whose shares are quoted on AIM, a market operated by The
London Stock Exchange. The presentational and functional currency of the
Company is Sterling. Results in this financial information have been prepared
to the nearest £1,000.
Whilst the financial information included in these interim accounts has been
prepared in accordance with IFRS, they do not contain sufficient information
to comply with IFRS. In addition, this report is not prepared in accordance
with IAS 34.
The profit before interest, tax, depreciation, amortisation and share-based
payment charge is presented in the statement of total comprehensive income as
the Directors consider this performance measure provides a more accurate
indication of the underlying performance of the Company and is commonly used
by City analysts and investors.
The comparative financial information for the year ended 30 June 2023 has been
extracted from the annual financial statements of Fonix Mobile plc. These
interim results for the period ended 31 December 2023, which are not audited,
do not comprise statutory accounts within the meaning of section 434 of the
Companies Act 2006. The financial information does not therefore include all
of the information and disclosures required in the annual financial
statements.
Full audited accounts of the Company in respect of the year ended 30 June
2023, which received an unqualified audit opinion and did not contain a
statement under section 498(2) or (3) of the Companies Act 2006, have been
delivered to the Registrar of Companies.
2. Going concern
At the time of approving the financial information, the directors have a
reasonable expectation that the Company has adequate resources to continue in
operational existence for the foreseeable future. Fonix Mobile is not
externally funded and accordingly is not affected by borrowing covenants. In
addition the cost of capital represents the dividend distributions - which are
discretionary.
At 31 December 2023 the Company had Cash and Cash Equivalents of £29.5
million (31 December 2022: £20.4 million) and Net Current Assets of £8.9
million (31 December 2022: £7.2 million). The business model of Fonix Mobile
is cash generative - with increased sales impacting positively on the working
capital cycle and profits from trading activities being rapidly reflected in
cash at bank.
Accordingly the Directors continue to adopt the going concern basis of
accounting in preparing this financial information.
3. Segmental reporting
Management currently identifies one operating segment in the Company under
IFRS 8 - being the facilitating of mobile payments and messaging. However, the
Directors monitor results and performance based upon the Gross Profit
generated from the Service lines as follows:
Unaudited Unaudited Audited
6 months to 6 months to Year to
31 December 31 December 30 June
2023 2022 2023
Gross Profit £'000 £'000 £'000
Mobile Payments 7,522 6,589 12,689
Mobile Messaging 1,308 856 1,626
Managed Services 368 361 760
9,198 7,806 15,075
Differences between the way in which the single operating segment is reported
in the financial information and the internal reporting to the Board for
monitoring and strategic decisions, relates to the recording of revenue in
line with IFRS 15. The IFRS adjustments do not impact on the calculation or
reporting of Gross Profit.
Gross profits can be attributed to the following geographical locations, based
on the end user and the associated mobile network operators' location:
Unaudited Unaudited Audited
6 months to 6 months to Year to
31 December 31 December 30 June
2023 2022 2023
Gross profit by geography £'000 £'000 £'000
United Kingdom 8,078 7,096 13,534
Rest of Europe 1,120 710 1,541
9,198 7,806 15,075
4. Revenue
The Company disaggregates revenue between the different streams outlined as
this is intended to show its nature and amount.
The total revenue of the Company has been derived from its principal activity
undertaken wholly in the United Kingdom and EU.
Revenue is recognised at the point in time of each transaction when the
economic benefit is received. The total revenue of the Company by Service Line
is as follows:
Unaudited Unaudited Audited
6 months to 6 months to Year to
31 December 31 December 30 June
2023 2022 2023
Revenue by Service Line £'000 £'000 £'000
Mobile Payments 28,375 24,633 47,607
Mobile Messaging 10,281 7,326 15,513
Managed Services 1,002 856 1,796
39,658 32,815 64,916
The number of customers representing more than 10% of revenue in period were 3
(31 December 2022: 3)
Revenues can be attributed to the following geographical locations, based on
the end user and the associated mobile network operators' location:
Unaudited Unaudited Audited
6 months to 6 months to Year to
31 December 31 December 30 June
2023 2022 2023
Revenue by geography £'000 £'000 £'000
United Kingdom 33,401 28,136 55,352
Rest of Europe 6,257 4,679 9,564
39,658 32,815 64,916
5. Earnings per share
The calculations of earnings per share are based on the following profits and
number of shares:
Unaudited Unaudited Audited
6 months to 6 months to Year to
31 December 31 December 30 June
2023 2022 2023
£'000 £'000 £'000
Retained profit for the period 5,685 4,845 8,797
Unaudited Unaudited Audited
6 months to 6 months to Year to
31 December 31 December 30 June
2023 2022 2023
Number of shares Number Number Number
Weighted average number of shares 99,783,276 100,000,000 99,970,504
Share options 656,941 619,959 760,799
100,440,217 100,619,959 100,731,303
Earnings per ordinary share
Basic 5.7p 4.8p 8.8p
Diluted 5.7p 4.8p 8.7p
At 31 December 2023 the company had 100,000,000 (31 December 2022:
100,000,000) shares in issue of which 122,443 (31 December 2022: nil) were
held in treasury.
The calculations of adjusted earnings per share are based on the following
adjusted profits and number of shares listed above:
Unaudited Unaudited Audited
6 months to 6 months to Year to
31 December 31 December 30 June
2023 2022 2023
Adjusted earnings per share £'000 £'000 £'000
Retained profit for the period 5,685 4,845 8,797
Adjustments
Share-based payment charge 46 64 125
Net adjustments 46 64 125
Adjusted earnings 5,731 4,909 8,922
Adjusted basic earnings per ordinary share 5.7p 4.9p 8.9p
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